[For Immediate Release]

Financial Highlights

Remarks: *Continuing operations excluding Qinqin Group

(25 August 2016 - Hong Kong) - Hengan International Group Company Limited ("Hengan International" or the "Company", SEHK stock code: 1044, together with its subsidiaries, the "Group") announces today its interim results for the six months ended 30 June 2016.

On 8 July 2016, Qinqin Foodstuffs Group (Cayman) Company Limited ("Qinqin Group", SEHK stock code: 1583) was spun off from the Group and listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). After spinning off the food and snacks business, the Group will focus on the production, distribution and sales of its personal hygiene products in the future.

For the six months ended 30 June 2016, excluding Qinqin Group, the Group recorded revenue of approximately RMB9,577,341,000 (2015 first half: RMB9,196,090,000), rose by about 4.1% compared with that of the previous period. Operating profit for continuing operations increased by about 2.6% to approximately RMB2,301,451,000 (2015 first half: RMB2,243,918,000). Overall profit attributable to shareholders increased by approximately 5.2% to RMB1,635,040,000. (2015 first half: RMB1,554,775,000). The Board of Directors declared an interim dividend of RMB0.85 per share for the six months ended 30 June 2016 (2015 first half: RMB0.78).

During the period, despite the fact that market competition remained intense, the Group was benefited from the positive impact of decline in raw material prices, optimized product portfolio and enhanced economies of scale, and hence the gross profit margin for continuing operations increased to approximately 48.1% (2015 first half: 46.7%). Distribution costs and administrative expenses for continuing operations increased to approximately 26.8% (2015 first half: 25.9%) of the Group's revenue for continuing operations, which was attributable to increase in marketing and advertising expenses for some emerging sales channels.

The effective tax rate was lowered to approximately 23.0% (2015 first half: 25.2%). The Group provided a large amount of dividend withholding tax in the second half of 2015 for the dividend which would likely be remitted out of mainland China in the foreseeable future. As such, the provision of dividend withholding tax required for the first half of 2016 became lower.

Mr. Sze Man Bok, Chairman of Hengan International, said, "In the first half of 2016, economic recovery in the US remained slow and Britain's vote to leave the European Union has increased uncertainties over the Eurozone economy. China's economic growth continued to decelerate. According to the National Bureau of Statistics of China, the country's gross domestic product for the first half of 2016 increased by 6.7% year-on-year, 0.3 percentage point lower than the previous year. Faced with unstable external environment, slowing economic growth in China and intensified competition in China's fast moving consumer goods market, business environment has become more challenging."

Sanitary Napkin
Accelerating urbanization and rising living standard continued to support the development of sanitary napkin market and drive the consumption. Although the overstocking issues encountered by distributors were substantially resolved, they still faced the problem of cash crunch, coupled with the impact of intensified market competition, hindering the Group's revenue growth in sanitary napkin sector. During the period, the revenue of the sanitary napkin business grew by approximately 9.1% to approximately RMB3,208,213,000, which accounted for around

33.5% of the revenue from continuing operations (2015 first half: 32.0%). The gross profit margin of sanitary napkin business rose to approximately 71.8% (2015 first half: 71.4%), thanks to the persistent decline in the prices of major raw materials, petrochemical products and optimized product portfolio.

The Group expects to see mild improvement in sales performance in the second half of 2016 as it will continue to invest in emerging sales channels, optimize its product mix and launch new and upgraded products, collaborate with distributors on the improvement in inventory management.

Tissue Paper
Mainland China's market for high-quality tissue paper has been expanding on the back of rising living quality and the Chinese people's increasing awareness of health. The market potential is enormous as China's tissue paper consumption per capita still lags behind that of developed countries. However, fierce competition and overall overcapacity in the industry continued to affect the growth rate of the Group's tissue paper business. The Group's tissue paper sales increased slightly by approximately 4.7% to approximately RMB4,567,635,000, accounting for approximately 47.7% (2015 first half: 47.4%) of the Group's total revenue from continuing operations.

Gross profit margin increased to approximately 37.7% (2015 first half: 36.2%) due to the persistent drop in price of tissue wood pulp, a major raw material, in the first half of 2016 .

The Group's annualized production capacity was approximately 1,020,000 tons, which is expected to increase to approximately 1,140,000 tons in the fourth quarter of 2016. The Group will expand its production capacity according to the market conditions and sales performance in the future. Besides, the Group expects the sales performance will improve mildly in the second half of the year as the Group will launch various new and upgraded products, and invest in the development of emerging online sales channel.

Disposable Diapers
Accelerating urbanization and the people's increasing awareness of personal hygiene continue to fuel the growing demand for diaper products. As many Chinese people still do not regard diapers as daily necessities, the market penetration rate of disposable diaper products is still low in the country, implying huge untapped market potential.

During the period, competition in the disposable diapers market became more intensified. The sales of mid-to-high end diaper products were affected by foreign competitors' expansion into the

For more information, please visit http://doc.irasia.com/listco/hk/hengan/interim/2016/intpress.pdf.

© Copyright 1996-2026 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.